• Following nearly two decades of negotiations that gained traction only in the past few years, the European Union (EU) and India concluded their discussions on a Free Trade Agreement (FTA) on 27 January. This agreement is significant, as it brings together two of the world’s largest economies, with a combined population of around two billion. The European Commission (EC) will submit the agreement to the Council and, after the Council’s adoption, the consent of the European Parliament and ratification by India, the FTA will become operational.
• With bilateral trade between the EU and India already being in excess of €186 bn, the FTA allows EU companies to access a high growth market, much-reduced tariffs than before in the automotive, consumer staples, and industrial sectors. Indian exports in sectors such as textiles, jewellery, pharmaceuticals and defence sectors would also benefit.
• Importantly, this deal will not immediately increase European exports or earnings but would provide European companies access to a large and growing pool of Indian consumers who are getting richer. It also reduces the volatility of earnings because they are more diversified. 
• Beyond the financial gains, we think this deal is a way for Europe to hedge its bets (with respect to the US and China), rely on growth centres of the world with a democratic governance model and diversify its exports. In an uncertain world where global policies are becoming more transactional in nature, such agreements improve the quality of Europe’s global exposure. Markets would appreciate this as a source of resilience and diversification of European growth in the long run.

You can now read the full whitepaper at the link below